2 min read
Compares total cost and monthly payment of two offers side by side.
What refinancing is
Refinancing means taking a new loan to repay an existing one, usually to secure a lower rate, a longer term, or more flexible terms. It is common when your business has strengthened since the original loan, or when rates have moved in your favour.
When it saves money
Refinancing pays when the new loan's total cost, plus any switching fees, is lower than what remains on the old one. An improved credit score or stronger trading can earn a materially better rate — worth capturing.
Count the switching costs
Watch for an early settlement charge on the old loan and an arrangement fee on the new one. These can erode or erase the saving. Only a comparison net of all costs tells you whether refinancing is worthwhile.
Refinance or consolidate?
Refinancing replaces one loan; consolidation combines several. If you carry multiple facilities, consolidation may serve better; for a single expensive loan, refinancing is the tool. See how to refinance.
Compare net of costs
Use the calculator to weigh the new loan's cost, including fees, against your existing one.
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.
Frequently asked questions
When is refinancing a business loan worth it?
When the new loan's total cost, including switching fees, is lower than what remains on the existing one. An improved credit score or stronger trading since the original loan often earns a better rate worth capturing.
What are the costs of refinancing?
Typically an early settlement charge on the old loan and an arrangement fee on the new one. These can erode the saving, so always compare the two loans net of every switching cost.
Is refinancing the same as consolidation?
No. Refinancing replaces a single loan with a better one; consolidation combines several debts into one. If you carry multiple facilities, consolidation may fit better; for one expensive loan, refinance.
Related reading
Consolidating business debt: when it helps and when it hides a problem
Consolidation can be a genuine saving or an expensive comfort blanket. Rolling several facilities into one…
Read →
How to refinance a business loan
Refinancing pays only when the new loan beats the old one net of costs. The method is simple arithmetic: what…
Read →
Total cost of credit: seeing past the monthly payment
A low monthly payment can hide an expensive loan. The figure that tells you the truth is the total cost of…
Read →How to reduce the cost of a business loan
Most of a loan's cost is decided before you sign. The amount, the term, the rate structure and the state of…
Read →Understanding APR on a business loan
APR is the number that lets you compare loans on equal terms. It rolls the interest rate and mandatory fees…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.